TWELVE Nigerian banks earned N2.323 trillion(about $3 billion) in profit after tax (PAT) in nine months, though the majority of their depositors live in abject poverty.
Economy Post analysis of 12 Nigerian banks showed that Zenith Bank Group earned the highest profit totalling N505.036 billion in nine months to September 2023, while Sterling Bank made the lowest profit of N16.484 billion over the period.
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The United Bank for Africa Group is next after Zenith Bank, with a PAT of N449.296 billion, followed by Guaranty Trust Bank Group which reported a profit of N365.417 billion. 
Access Bank reported a profit totalling N250.444 billion, followed by First Bank of Nigeria whose PAT stood at N236.502 billion for the period ending September 2023.
Eco Bank is next with a PAT of N182.92 billion for Nigerian operations, whereas Stanbic IBTC recorded a profit of N109.249 billion.
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Similarly, Fidelity Bank reported N91.753 billion gain over the period, while First City Monument Bank recorded a profit of N49.153 billion. Wema Bank and Unity Bank made profits of N19.241 billion and N47.917 billion respectively.
Depositors’ poverty
In contrast to banks’ humongous profits, millions of bank depositors are living in extreme poverty. On October 26, 2021, Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Mr Bello Hassan, said that 99.4 percent of depositors’ bank accounts contained less than N500,000.
In 2016, Director of Research and International Relations at NDIC, Mr Mohammed Umar, had noted that only 2 percent of Nigerians owned 90 percent of total deposits in Nigerian banks.
“What we found is that only two percent Nigerians have 90 per cent of banks’ total deposits. The remaining 98 per cent have just 10 percent of total deposits. What that tells you is that the gap between the rich and the poor has continued in this country,” he said at BusinessDay Capital Market Development Annual Conference held in Abuja, as reported by Vanguard.
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About 52.1 million Nigerians own 134 million active bank accounts as at 2022, according to data from the Nigeria Inter-Bank Settlement System (NIBSS).
This means that only 1.042 million individuals have N500,000 and above in their accounts, translating to 0.5 percent of the Nigerian population.
As at March 2023, total deposits in banks stood at N19.91 trillion, according to the Central Bank of Nigeria (CBN).
Hence the self-explanatory data show that though banks make billions of naira in interest income from depositors’ money, the prosperity is not transmitting to their customers.
Bank customers range from hawkers to traders and to civil servants and bricklayers.
Poverty data not looking good
In 2022, the National Bureau of Statistics (NBS) released a poverty report, saying that 63 percent of persons living within Nigeria (133 million people) were multidimensionally poor.
The report noted that poor people in Nigeria experienced just over one-quarters of all possible deprivations, stressing that 65 percent of the poor (86 million people) lived in the North, while 35 percent (nearly 47 million) lived in the South.
“Over half of the population of Nigeria are multidimensionally poor and cook with dung, wood or charcoal, rather than cleaner energy. High deprivations are also apparent nationally in sanitation, time to healthcare, food insecurity, and housing,” the report noted.
The report further disclosed that multidimensional poverty was higher in rural areas. Two-thirds (67.5 percent) of children (0–17) were multidimensionally poor, and half (51 percent) of all poor people were children.
“Child poverty is prevalent in rural areas, with almost 90% of rural children experiencing poverty. Four million Nigerians – 2.1% of the population – live with a child aged 15–17 who is the first generation in that household to have completed primary school,” the report added.
Banks are creating poverty -Experts
Eniola Kolawole sells clothes in Oshodi, Lagos. When her business started booming in 2021, she went to her bank for a N5 million loan.
“They said they would not give me N5 million. They accepted to give me only N1 million at an interest rate of 29 percent. I left them because it is only a thief that can repay a loan at 29 percent in one year,” she told Economy Post.
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Experts say the major reason why banks make billions of naira in profits while their depositors are becoming poorer is the discriminatory lending rates across banks.
Nigeria’s monetary policy rate (MPR), which is the benchmark interest rate, stands at 18.75 percent, making it hard for any financial institution to lend at lower rates.
However, officials of Nigerian banks lend to themselves at single-digit interest rates but charge businesses an arm and a leg.
Economy Post reported that Zenith Bank granted loans to its directors and key management staff at an average interest rate of 4 percent but charged small businesses as high as 27 percent for credit.
Economy Post also reported that Access Bank granted loans to its associates and management personnel at 8 percent interest rate in the first six months of 2023, while providing the same support to customers and businesses at rates between 27.6 percent and above.
Many deposit money banks charge 25 to 35 percent to provide credit to critical players in the economy, but lend the same funds to their staff at “ridiculously lower rate.”
Former Nigerian Bar Association (NBA) President, Dr Olisa Agbakoba, said Nigeria was yet to become a credit nation, making it difficult for many Nigerians to realise their ambitions.
“Banks are declaring billions in revenue and profits but people are getting poorer,” he said at a luncheon to mark Senate President, Mr Godswill Akpabio’s 61st birthday last week.
“In Nigeria, I have not got a loan from any bank but I have got loans in the UK, which have helped me to do lot of things. Right now, Nigeria is not a credit nation. We must make Nigeria a credit nation,” he said.
In 2022, political economist, Prof Pat Utomi, had said in an interview that banks were not functioning as agents of development.
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He had explained that one of the purposes of the 2005 bank consolidation was to make huge credit available to farmers, small businesses, and other critical sectors of the economy at very low interest charges, regretting that this was not happening.
Bank credit to the private sector in Nigeria rose to N43.07 trillion in the first quarter (Q1), signifying an increase of 3.7 per cent or N1.5trillion in the first quarter of 2023. However, the challenge is the interest rate at which the credit was obtained from the deposit money banks, experts said.
“At what rates was the credit made available to the private sector?” asked a United Kingdom-based economist, Dr Kelvin Opara.
“You cannot have prosperity when MSMEs obtain loans at 30 percent interest rate. No, never. Even the so-called intervention funds, how many people have access to it? We must stop deceiving ourselves as a nation and take matters of monetary policies seriously.
“The CBN and the Nigerian government must begin to ensure that those in need of cash for development get it. Only then can you have more jobs and investments in the economy,” he added.
